Correlation Between Sonos and BBB Foods
Can any of the company-specific risk be diversified away by investing in both Sonos and BBB Foods at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sonos and BBB Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonos Inc and BBB Foods, you can compare the effects of market volatilities on Sonos and BBB Foods and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sonos with a short position of BBB Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonos and BBB Foods.
Diversification Opportunities for Sonos and BBB Foods
Poor diversification
The 3 months correlation between Sonos and BBB is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Sonos Inc and BBB Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBB Foods and Sonos is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sonos Inc are associated (or correlated) with BBB Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBB Foods has no effect on the direction of Sonos i.e., Sonos and BBB Foods go up and down completely randomly.
Pair Corralation between Sonos and BBB Foods
Given the investment horizon of 90 days Sonos Inc is expected to generate 0.94 times more return on investment than BBB Foods. However, Sonos Inc is 1.06 times less risky than BBB Foods. It trades about 0.09 of its potential returns per unit of risk. BBB Foods is currently generating about -0.2 per unit of risk. If you would invest 1,298 in Sonos Inc on August 30, 2024 and sell it today you would earn a total of 66.00 from holding Sonos Inc or generate 5.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonos Inc vs. BBB Foods
Performance |
| Timeline |
| Sonos Inc |
| BBB Foods |
Sonos and BBB Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonos and BBB Foods
The main advantage of trading using opposite Sonos and BBB Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonos position performs unexpectedly, BBB Foods can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in BBB Foods will offset losses from the drop in BBB Foods' long position.| Sonos vs. VOXX International | Sonos vs. LG Display Co | Sonos vs. Turtle Beach Corp | Sonos vs. Koss Corporation |
| BBB Foods vs. BJs Wholesale Club | BBB Foods vs. Dollar General | BBB Foods vs. Dollar Tree | BBB Foods vs. Target |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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